Simon Brown: Inappropriate Behavior During Breaks is Unacceptable
Heading offshore, it seems, has become a treacherous adventure for many South African businesses. The JSE parades a lineup of companies that harbored dreams of grand international expansion before they ultimately admitted defeat and returned home, tails between their legs, and a lot lighter in the wallet (or burdened with more debt) than they started. (We won't name names, but Woolworths and Famous Brands come to mind.)
For businesses looking to spread their wings, going global can provide untapped markets and lucrative opportunities. However, the reality is often different, as many businesses have discovered to their dismay.
South African companies, especially those in the mining sector like Exxaro, have faced significant hurdles in their offshore ventures. One example is Exxaro's attempt to acquire the Khoemacau copper mine in Botswana, which fell through due to strong competition from a Chinese firm. Such instances highlight the challenges South African companies face when competing on the global stage for strategic assets[4].
Beyond the mining sector, investor skepticism and execution risks can make successful offshore expansion more elusive for South African businesses. Commentary from the investment industry suggests that local investors often greet offshore expansion plans with a critical eye, which can make securing financing and building trust for international ventures more difficult[2].
Additionally, while South Africa itself is increasingly seen as an attractive destination for offshored operations by international companies, the opposite – South African companies expanding offshore – can be fraught with operational and strategic challenges[3].
In summary, aspiring to conquer the globe might seem alluring, but for many South African businesses, offshore expansion has resulted in bitter lessons learned. Whether it's the heavy competition for strategic assets, investor skepticism, execution risks, or operational difficulties, offshore ventures require shrewd strategy and resilience.
Sources:
- https://www.businesslive.co.za/bd/smallbusiness/2022-08-31-lessons-learned-and-the-Tough-Road-Ahead-for-Struggling-Businesses/
- https://www.bdlive.co.za/bdlive/economy/2021/03/08/sa-inc-diversification-spree-is-making-minorities-miserable
- https://www.bdlive.co.za/business/2022/05/26/pulp-and-paper-providing-jobs-and-foreign-exchange
- https://www.miningweekly.com/article/exaros-khoemacau-takeover-fail-more-than-just-a-botswana-story-2020-07-31
Expanding a business into the global market is appealing for its untapped opportunities, but South African businesses frequently encounter challenges. From intense competition for strategic assets, investor skepticism, execution risks, to operational difficulties, successful offshore ventures require a strategic and resilient approach.
For finance and retail companies looking to venture into other industries, the investment industry can raise doubts, making securing financing and building trust for international plans more challenging.
